Strategic Group Map

3.
Competitive Analysis
Strategic Group Map for the Malaysian Automotive Industry

High
Mercedes-
BMW Benz
Price/Perceirved Quality
Honda Volkswagon
Mazda
Proton
Toyota
Nissan
Perodua
Kia
Low Nar- Wide

Product Breadth
row
Figure 1
A strategic group shows the various firms in an industry that share similar products and
competes in the same field. It illustrates the degree closeness between the companies’
competition. Figure 1 above shows the strategic group map for the Malaysian Automotive
Industry. The map above charts the approximate competitive positions of the ten (10) largest
automobile brands by market share in Malaysia.
The variables used here are product breadth, or the varieties of automobiles available by a
particular automobile brand in Malaysia; the other variable is price, perceived quality, which is
measured by the average price of all automobiles variants available for sale in Malaysia. All in
all, the aggregate market share of the 10 car brands represents 96.3% of the market for personal
vehicles in Malaysia. Perodua has the largest share at 39.0%, while Kia has the smallest share at
0.9% (Malaysian Automotive Association, 2017). Detailed figures are provided in the table
below.
Automobile Price Range of Average Price of Number(s) of Market Share

Brand Models Automobiles Models currently (%)
Currently on (Price, in on Sale (Product
Sale (RM,000) RM,000) Breadth)
Perodua 24-65 44.5 4 39.0
Honda 71-248 159.5 10 20.5
Proton 41-135 88 10 15.4
Toyota 70-505 287.5 12 9.4
Nissan 72-388 230 11 4.0
Mercedes-Benz 195-1,400 797.5 30 2.3
BMW 171-889 530 27 1.9
Mazda 90-328 209 13 1.8
Volkswagen 70-503 286.5 16 1.1
Kia 54-165 109.5 8 0.9
Table 1
Looking at Figure 1, the competition among the 10 car brands can be roughly divided
into two segments, the majority segment, in which most firms have low to moderate price and
offers a small to moderate number of models for sale; another is BMW and Mercedes-Benz, who
offers a high price for their models and also a wider range of models to choose from. The
majority segment shows strong intragroup competition, as there are many brands striving for
market share with roughly comparable varieties and prices. By far the most favorable placed
vehicle brand is Mercedes-Benz, as is not close to most of the other brands save BMW since
both brands mostly focus on the premium consumer segment in Malaysia.
For Honda Malaysia, it faces very strong competition by other vehicle brands. It not only
has to compete with other brands on the basis of price, which may be similar or cheaper, but also
in terms of external issues as well. For instance, more stringent vetting process in hire purchase
loan approvals in the second half of 2017 has hurt the Malaysian automotive industry, resulting
in lesser demand for vehicles (Paul Tan, 2017). This is due to Malaysia having a high household
debt-to-gross domestic product ratio of 88.5 per cent, which means credit-tightening by lending
institutions as a measure to reduce lender default (Rosli, 2017). But with the supply nearly
constant, Honda has to compete heavily with other brands to maintain its position as the second
largest car seller in Malaysia.
Secondly, the fact that many Malaysians already own cars, and the small population
(32Million) of Malaysia means it will be harder and harder as time goes by for Honda to increase
sales to consumers. As the local trend for vehicles is for more fuel-efficient and smaller vehicles
in light of the uncertain economic conditions, Honda will have to fight with small vehicles in the
form of the Perodua Myvi, Perodua Axia, which are more affordable than Honda’s own Honda
Jazz (Around RM 71,000 vs RM 37,000 to RM 51.000). Besides, it also has to contend with
other small cars of higher quality and perception in the form of the Volkswagen Polo Sedan (Car
Price, 2017).
However, the introduction of new models with latest designs and specifications at
competitive prices may assist to sustain buying interest (Ratna, 2017). Although car sales
dropped in September 2017, Honda was still able to maintain strong sales relative to competitors
Perodua, Proton, and Toyota, all of whom faced difficulties in economic factors plus rising oil
prices. Honda has introduced the revamped CR-V and City in hopes to capture or at least
maintain market share by offering hybrid variants and fuel-saving functions for the price-
conscious consumer (Honda, 2017). Plus, the Honda Jazz Hybrid was named 2017 Overall Car
of the Year, thus boosting Honda’s competitive position in the nation (The Star, 2017).
Therefore, despite the competition of price and quality/consumer perception posed by

other close intragroup competitors like Perodua, Nissan, Toyota and Volkswagen, Honda’s
competitive outlook still remains robust. With appealing car features, reliable systems, more new
models or variants in the market, and plus its motoring awards, helps enable Honda Malaysia to
capture one-fifth of the Malaysian vehicle market.

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3.

Strategic Group Map for the Malaysian Automotive Industry

Low Nar- Wide

Automobile Price Range of Average Price of Number(s) of Market Share

Therefore, despite the competition of price and quality/consumer perception posed by

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